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View Diary: Breaking: Boehner offers to take debt limit off the table (57 comments)

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  •  No. We need to get more revenue. (5+ / 0-)

    Otherwise, just let them all go up and then offer a bill for the middle class cuts only.

    •  If revenue is the issue, $1 million is fine (3+ / 0-)

      The Tax Policy Center recently did a study showing that raising rates at $250,000 raises only $14 billion over 10 years -- $1.4 billion a year -- more than a $1 million threshold.  

      It's summarized here.

    •  playing defense (1+ / 0-)
      Recommended by:
      phonegery

      If we remember that the top marginal income tax rate was 90% under Eisenhower, and 70% under Nixon, and 50% under Reagan, doesn't it seem like we are playing on the wrong side of the field when we are fighting over whether the top rate should be 35% or 39%?  I am for raising the top rate back to 39%, but I don't see any significant difference between numbers like 35 and 39.  It's more important to get some Republicans to agree to the principle that sometimes you have to raise some taxes. Once they do that, we're just talking about arithmetic.

      •  joe - rates before 1986 and those after (2+ / 0-)
        Recommended by:
        JerryNA, coffeetalk

        are apples and oranges. The Tax Reform Act of 1986 so fundamentally changed the IRS code for individuals that top marginal rates before TRA86 and those after are not comparable. The fact that top marginal rates were as high as 90% means nothing because legal tax shelters were available that allowed top earners to lower their effective rate as low as single digits. For comparison purposes the focus needs to be of effective rates (the rates the top 1% actually paid). When the top marginal rate was 90% the effective rate was less than 40%.

        "let's talk about that"

        by VClib on Sun Dec 16, 2012 at 05:49:34 PM PST

        [ Parent ]

        •  that's all true but (0+ / 0-)

          not everybody could invest in tax shelters. And those high rates had the effect of moderating pay for business executives, professionals, athletes, etc. It's kind of wasteful to pay a CEO millions in salary if most of it is going to the government. So the high rates I think had an impact in terms of reducing inequality. It is not a coincidence that inequality has increased dramatically in the years since we dropped the top marginal rate below 70%.

          It's also important to note that one other important feature of the 1986 tax reform act was to INCREASE the capital gains tax rate to the same rate as paid on earned income. That didn't last long, however. But that was one of the tradeoffs that allowed low income tax rates to take hold. Reagan, who earned his money by working, could not understand why capital gains should be taxed at a lower rate. And as a result, nobody could get away at that time with paying the kind of tax rates that people like Mitt Romney pay. Now we still have the low top marginal tax rates, and we have even lower rates for capital gains. And that defeats a lot of the fairness arguments that were made in favor of the 1986 act, i.e., that wealthy people will actually pay more if we eliminate deductions and tax shelters.

          •  joe - the only reason that capital gains tax (0+ / 0-)

            and the top marginal rate on earned income were the same is because the top rate was 28%, about what many people were already paying for long term capital gains. It was a very modest effective increase in actual long term capital gains tax rates. Before TRA86 you paid half your top effective rate as the capital gains rate. That has been the long term standard in the US and the ONLY time the two rates were the same is the years after TRA86 before the next increase in the top marginal rates during the Presidency of GHWB. Every G20 country has a lower capital gains rate than earned income rate, although some are higher than ours. I favor return to the Clinton era rates for everybody which increases the top marginal rate to 40% and the capital gains rate to 20% plus the new 3.8% Medicare tax for a 24% capital gains rate.

            "let's talk about that"

            by VClib on Mon Dec 17, 2012 at 08:55:48 AM PST

            [ Parent ]

            •  Look how much has changed since 1986. (0+ / 0-)

              I think I need to write a much longer post about this, but for now let's just look at how different the arguments in favor of tax reform were in 1986 from what we are hearing now. Back then the argument in favor of lowering the top marginal rate was that wealthy people were wasting money on unproductive investments to shelter their income and that we would actually take more from them if we lowered their rates. And we would compensate for that to some extent by raising capital gains rates.

              Now we are hearing wealthy people talk as if they have a God-given right to pay rates of 35% or less, and that this is justified because they spend their money in so much more productive ways than ordinary working class people who seem to waste so much money on mundane items like food, clothing and shelter. Better to let the "job creators" keep even more of their income because they will spend it on better things (like vacation homes, jewelry, fancy European cars, or fine wines perhaps?). And this nonsense is combined with disparaging remarks about the so-called 47% whose incomes are so low we have decided they are not worth taxing at the federal level. Suddenly these people, for the most part low wage workers, are being portrayed as freeloaders who are not paying their fair share.  We had a multi-millionaire presidential candidate who ironically scored 47% of the vote who bragged about paying 14% of his income in taxes, and who thought that was fair.

              So we have traveled very far from a world where we were actually trying to get the wealthy to pay more (the world where the 1986 tax reform act attracted bi-partisan support), to a world where Republicans are openly calling for the wealthy to pay less and the poor to pay more. And this at a time when the disparity in favor of the wealthy is much, much greater than it was in 1986.

              Now we are in a world where Democrats have to fight tooth and nail to get back to a pathetic top rate of 39%. And we haven't even started talking about capital gains, something for which Republicans will fight even harder than they are fighting to preserve the 35% top marginal rate.

              You don't think we're playing defense?

    •  Note .... 250K in 1993 = 383K today (1+ / 0-)
      Recommended by:
      Dream It Real

      So moving the rate up to the 400K range makes inflationary sense.  The issue is getting to the revenue and expense numbers needed to make things work.  And for that, we need some serious defense spending cuts.

      I also wonder - if we let the tax cuts expire ... what if we just adjusted all the Clinton rates for inflation come 2013... and put in an inflation adjuster so middle incomes don't creep into higher brackets with inflation?

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